VietNamNet Bridge - The record low freight for both inland waterways transport and international routes has caused a crisis among shipping firms, big and small, state-owned and privately run.

According to Trinh Quoc Dat, chair of the Diem Dien Shipping Association in Thai Binh province, the association’s members still maintain 300 ships with tonnage of 2,000-5,000 tons. The cargo for transport is mostly coal, cement and fertilizer from the north to the south, and steel and rice from the south to the north.

“The demand is low and the freight is also low, just VND70,000-80,000 per ton for the HCMC – Hai Phong City route,” he complained. “However, we still have to run our ships, despite the loss. If we leave the ship ashore, the loss would be even higher.”

Dat said ship owners were now meeting difficulties also because of the underground fee. It officially costs VND3-4 million only for a trip from Hai Phong to HCMC, but in fact, ship owners have to pay VND30 million, counting the ‘under-the-table fee’. 

The record low freight for both inland waterways transport and international routes has caused a crisis among shipping firms, big and small, state-owned and privately run.

Not only are privately run small shipping firms meeting difficulties, but large conglomerates have also been undergoing a slump in recent years.

Vosco, which once led the sea shipping industry, for example, reported a loss of VND297 billion in 2015, which was partially attributed to the sharp fall in freight. 

The BDI (Baltic Dry Index) in the year fell from over 1,000 points in the third quarter to 491 points in December 2015, which was just equal to 4 percent of the peak (11,793 points).

Since shipping firms have few orders in the international market, they tend to bring their ships to the domestic market. This has led to the oversupply, which has caused a drop in fees for goods handling and shipping.

Analysts think the situation will not be better in 2016. The BDI dropped further to a low of 290 points in February. 

A representative of Vosco said that since there were too few transactions and the ship chartering fee is on a sharp decrease, the firm has to reconsider its business strategy or it would incur heavier losses.

Nosco also reported a post-tax loss of VND95 billion in the first quarter of the year, raising the accumulative loss to over VND3 trillion. Meanwhile, VST reported the gross loss of VND816.8 billion by the end of the first quarter.

According to Vinamarine, the Vietnamese fleet can undertake 100 percent of the inland sea shipping volume, but can only hold 10-12 percent of the imports/exports shipping market share. It is estimated that Vietnam’s import/export companies have to pay $300 million in fees and charges every year to foreign ship owners because of the poor capacity of the Vietnamese fleet.


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